*669]

*MORGAN and Another, Assignees of GEORGE KNIGHT, a Bankrupt, v. CHARLES KNIGHT. Jan. 20.

A second fiat against a trader who has not obtained his certificate under the first, is not void, Therefore, the assignees under the second fiat may maintain an action against a third person for the conversion of property acquired by the bankrupt after the date of the first fiat,-the assignees under the first fiat not intervening.

THIS was an action brought by the plaintiffs as assignees of George Knight, a bankrupt, to recover the value of certain furniture and fixtures which were claimed by the plaintiffs as part of the bankrupt's

estate.

The cause was tried before Bramwell, B., at the last Summer Assizes at Lewes. The facts which appeared in evidence were as follows:-George Knight, who carried on business at Brighton, became bankrupt in the year 1850, but did not obtain a certificate. He, however, continued to trade; and in the months of February, March, and April, 1862, he obtained from tradesmen in Brighton the goods in question, for the purpose of furnishing a house and shop at Worthing for his son, the present defendant, of which house and shop the latter had taken a lease. The parties by whom the goods were supplied drew bills upon George Knight, which were dishonoured and renewed and ultimately, in November, 1862, George Knight again became bankrupt. He afterwards went to reside at Worthing; but did not reside at his son's house. The son's name was over the door; and it did not appear that the father exercised any control over the property there.

On the part of the plaintiffs, it was submitted that the transfer of the goods to the son was a fraudulent transfer, and void.

For the defendant, it was attempted to be shown that he had paid his father for the goods; but this was negatived by the jury. It was then contended on the part of the defendant, that the plaintiffs had no *right to recover; for, that, George Knight being an uncertifi

*670] cated bankrupt at the time of the adjudication under which

they were assignees, all his property both present and future was vested in the assignees under his former bankruptcy, and the latter bankruptcy was void.

It did not appear that the assignees under the first fiat against George Knight made any claim.

The learned judge directed the verdict to be entered for the defendant, reserving leave to the plaintiffs to move to enter it for them for 100%., if the court should be of opinion that they were in a position to maintain the action.

Lush, Q. C., in Michaelmas Term last, obtained a rule nisi accordingly. He submitted that an uncertificated bankrupt might possess property until his assignees interposed; and that it was not competent to a wrongdoer to set up the jus tertii. He referred to Herbert v. Sayer, 5 Q. B. 965 (E. C. L. R. vol. 48), Dav. & M. 723, and Re Bissell's Trust, 25 Law J. Chan. 323.

Montagu Chambers and Prentice, on a former day in this term showed cause.-The question is, whether after-acquired property of an uncertificated bankrupt can be made the subject of an action at the

suit of the assignees under a second fiat. It is submitted that it cannot. The second fiat is altogether void, and no property passes to the assignees under it. By the 1 & 2 W. 4, c. 56, s. 25, it was enacted, that, "when any person hath been adjudged a bankrupt, all his personal estate and effects, present and future, which by the laws now in force may be assigned by commissioners acting in the execution of a commission against such bankrupt, shall become absolutely vested in and transferred to the assignees or assignee for the time being, by virtue of their appointment, without any deed of assignment [*671 for that purpose, as fully to all intents as if such estate and effects were assigned by deed to such assignees and the survivor of them" and the 141st section of the 12 & 13 Vict. c. 106, in even more extensive language, enacted, that, "when any person shall have been adjudged a bankrupt, all his personal estate and effects, present and future, wheresoever the same may be found or known, and all property which he may purchase, or which may revert, descend, be devised or bequeathed or come to him before he shall have obtained his certificate, and all debts due or to be due to him, wheresoever the same may be found or known, and the property, right, and interest in such debts, shall become absolutely vested in the assignees for the time being, for the benefit of the creditors of the bankrupt, by virtue of their appointment." In Till v. Wilson, 7 B. & C. 684 (E. C. L. R. vol. 14), 1 M. & R. 580, it was distinctly held that a second commission issued against a trader before a former commission has been disposed of, is a nullity. [WILLES, J.-All the authorities are collected in Herbert v. Sayer, 5 Q. B. 965 (E. C. L. R. vol. 48), D. & Meriv. 723.] In Nelson v. Cherrill, 1 M. & Scott 452, 8 Bingh. 316, Tindal, C. J., says: "It appears to me that, so long as the decisions in the Court of King's Bench and in this court remain upon the books, a second commission, pending a first, is void in point of law. I am therefore of opinion that the second commission in this case conferred no rights upon these defendants, and consequently that the plaintiff was entitled to recover. It seems that the plaintiff was in the actual possession, and had the apparent right to these goods; and that the defendants seized them under a supposed authority vested in them by virtue of the second commission. That commission being void, they have taken the goods without any authority. The only question then is, whether the defendants can be permitted to [*672 set up the rights of a third person, in order to defeat the action. I think that would be admitting a trespasser to clothe himself with rights which the law does not allow him." The like was held by Lord Eldon in Ex parte Brown, 1 Ves. & B. 60: and see Ex parte Proudfoot, 1 Atk. 252; Ex parte Storks, in re Evans, 2 Rose B. C. 179, and In re Chambers, 3 Mont. & Ayr. 294, 2 Deacon 394. [WILLES, J.-Have the creditors of an uncertificated bankrupt no right to come upon goods left in the order and disposition of the bankrupt after a first fiat?] The property is in the first assignees.

Hannen and Willoughby, in support of the rule.-The cases where the second commission has been held to be void have been mostly cases where the bankrupt has been seeking to rely upon the certificate obtained by him under the second commission. They clearly afford no guide for the decision of this case. [WILLES, J.-In Butler v.

Hobson, 4 N. C. 290, 5 Scott 824, it was held that goods allowed to be in the order and disposition of a bankrupt as reputed owner, by the consent of his assignee, are liable to be seized, upon a subsequent insolvency, by the assignee of the Insolvent Debtors Court.] The effect of the decision in Herbert v. Sayer is, that the bankrupt, notwithstanding the absence of a certificate under the first fiat, has a qualified right of possession at all events of personal estate subsequently acquired, and may maintain actions in respect of it until his assignees intervene. In Drayton v. Dale, 2 B. & Č. 293 (E. C. L. R. vol. 9), 3 D. & R. 534, to assumpsit by the endorsee against the maker of a promissory note payable to A. B. or his order, the defendant pleaded, first, non assumpsit,-secondly, that A. B. became a bankrupt, and that his property was duly assigned to assignees, whereby the interest, title, and right to endorse the promissory note before the time of endorsement became vested in the assignees, whereby *673] the endorsement by A. B. was void, and created no right in the plaintiff to sue. The plaintiff replied to the last plea, that the endorsement was made with the consent of the assignees. The rejoinder took issue upon that fact: and, a verdict having been found for the plaintiff on the first issue, and for the defendant on the second, it was held that the plaintiff was entitled to judgment on the whole record,-first, because the defendant, who had made the note payable to A. B. or his order, was estopped from saying that A. B. was not competent to make an order,-secondly, because the property acquired by a bankrupt subsequently to his bankruptcy did not absolutely vest in the assignees, though they had a right to claim it; but, if they did not make any claim, the bankrupt had a right to such property against all other persons. (a) So, in Laroche v. Wakeman, Peake N. P. Č. 140, it was held, that, if an uncertificated bankrupt carry on trade, and sell a vessel to A., he has a good title against all persons but the assignees. In Fyson v. Chambers, 9 M. & W. 460, it was held that a party who had taken possession of the goods of an intestate after his death, could not set up as a defence to an action of trover by the administrator, that the intestate had been first insolvent and then bankrupt, and had not paid 15s. in the pound under the fiat, and that therefore the property in the goods vested absolutely in the assignees; the goods having been acquired by the intestate after the bankruptcy, and he having been allowed by the assignees to retain possession of them. There, Chambers was a mere wrongdoer, as the defendant is here. That case is a direct authority. It has frequently been referred *674] to with approbation, and has never been *impeached. In Chitty on Pleading, vol. 1, p. 29, it is said that "the bankrupt is in several instances allowed to sue in his own name in respect of property acquired and contracts made by him after the bankruptcy and before he has obtained his certificate; for, although the appointment of the assignees vests in them all property which may accrue in any way to the bankrupt before he obtains his certificate, it has been determined in many cases that such property does not vest absolutely in the assignees, although they have a right to claim it; but, if they forbear from making any claim, the bankrupt has a right against all other persons, and may maintain actions accordingly.' In Ex parte

(a) Drayton v. Dale was decided prior to the passing of the 6 G. 4, c. 16.

Butler, In re Bakewell, 2 M. D. & De Gex 731, an assignee under a second commission, under which the bankrupt obtained his certificate, but did not pay 15s. in the pound, lay by while the bankrupt was subsequently trading to a great extent for a period of eight years, without making any claim to his subsequently acquired property. The party then became bankrupt a third time: and it was held that the assignee under the third bankruptcy, and not the assignee under the second commission, had, on principles of equity, the preferable claim to the property thus subsequently acquired; and that such principle of equity applied as well to real as to personal property, notwithstanding the clause of order and disposition (6 Geo. 4, c. 16, s. 72) only applied to personal estate. Cur, adv. vult. ERLE, C. J., now delivered the judgment of the court: (a)In this case a rule had been granted for setting aside the verdict for the defendant, and entering it for the plaintiffs for 1007. It [*675 was an action of trover by the plaintiffs as assignees of the bankrupt. The defence was, that the bankrupt was an uncertificated bankrupt at the time of the adjudication under which the plaintiffs became assignees; that therefore the property both present and future of the bankrupt was vested in the assignees under the former bankruptcy; and that the latter bankruptcy was void.

It appeared, that the bankrupt, after the first bankruptcy, had traded, and in the course of that trading had obtained the goods in respect of which the action was brought, and had made a fraudulent assignment of those goods to his son, the defendant; that the party who supplied the goods was the petitioning-creditor in the second bankruptcy, and was seeking by means thereof to recover payment for the goods so fraudulently assigned; and that the assignees under the former bankruptcy had not in any manner interfered. Under these circumstances, the claim of the defendant to defeat the plaintiffs by setting up the right of the former assignees seems inequitable and unreasonable; and we have to ascertain whether it can be maintained according to law.

In support of this claim, the defendant cited several authorities. In Till v. Wilson, 7 B. & C. 686 (E. C. L. R. vol. 14), 1 M. & R. 580, it appeared that the uncertificated bankrupt had traded and become indebted, and that a second commission had issued against him, under which he had obtained his certificate. He was taken in execution for a debt which would have been barred by the certificate, if the second commission was valid; but the court refused to discharge him out of custody, because it held the second commission under these circumstances to be a nullity. In Fowler v. Coster, 10 B. & C. 427 (E. C. L. R. vol. 21), 5 M. & R. 352, the defendant moved to be discharged out of custody for a debt which was barred by his certificate. *under a commission, if that commission was valid. His [*676 motion was opposed on the ground that he had been twice bankrupt, and obtained two certificates, and had paid no dividend, and that therefore the third commission, on which he relied, was void for the same reason that would have made it void if he had been an uncertificated bankrupt. The court adjudged the commission to be (a) The judges present at the argument were Erle, C. J., Williams, J., Willes, J., and Keating, J.

absolutely void. In Phillips v. Hopwood, 1 B. & Ad. 619 (E. C. L. R. vol. 20), it appeared that the plaintiffs were assignees under a commission issued against an uncertificated bankrupt, and were entitled to maintain trover if their commission was not void by reason of the former commission: and it was held to be void. In Nelson v. Cherrill, 7 Bingh. 663 (E. C. L. R. vol. 20), 5 M. & P. 680, in trespass for taking goods, the question was raised by the pleadings whether a commission against an uncertificated bankrupt was void: and the court adjudged it to be so, on demurrer. Afterwards, on the trial of the issues in the same case,-8 Bingh. 316, 1 M. & Scott 452,the question was again raised in respect of the right of the assignees under the last commission to goods in the order and disposition of the bankrupt at the time of the bankruptcy: and the court again decided that the last commission was void, and refused a rule to show cause, on the ground that the matter was decided. In coming to these decisions, the courts relied on the dicta of several Chancellors, and on Martin v. O'Hara, Cowp. 823. These authorities have been fully dis cussed in the cases cited below; and it suffices to observe here, that, in none of the cases before the Chancellors above referred to was there a decision that the last commission was void; on the contrary, in several, its validity to a limited extent was recognised. Also, in Martin v. O'Hara, Lord Mansfield assigns as one reason for refusing

to discharge the defendant out of custody, that the later *com*677] mission was tainted with fraud on the part of the bankrupt. All of these decisions rest on these two propositions,-first, that an uncertificated bankrupt can have no property,-secondly, that, if there is no property, a commission is void, by reason that there cannot be any effects to be administered under it.

The cases above referred to are strong authorities for holding the last bankruptcy to be void. But the authorities for holding it to be valid, and the reasons on which they are founded, appear to us to be stronger.

It is clear that property is not an essential for constituting bankruptcy. If there is the requisite trading, and debt, and act, the bankruptcy is valid, without any property. It is also clear that an uncertificated bankrupt may acquire property. This appears from the law which transfers his after-acquired property to his assignees. This law assumes that he may acquire property; otherwise there could be none to be transferred: and the result of the cases is, not only that he may acquire property, but that he may hold it against all the world except his assignees, and may create rights to hold it against them if they expressly or impliedly consent to such property being in his order and disposition at the time of a subsequent bankruptcy.

In Fyson v. Chambers, 9 M. & W. 468, the plaintiff was the administrator of a bankrupt who had been before insolvent, and had not paid 15s. in the pound under his bankruptcy. After the death of the bankrupt, the defendant, as auctioneer, had sold the goods for the next of kin, and paid over the proceeds: and he was still held liable to the plaintiff, who had taken out administration after the conversion. The effect of the decision is, that an uncertificated bankrupt may acquire property. As the conversion by the defendant was at the request of